Accounting principles are of immense importance in accounting. Accounting principles are followed in the preparation of the statement of comprehensive income and the statement of financial position.
Today we’ll learn “35 Short Questions and Answers-Accounting Principles.” If you read it with a proper concentration from top to bottom, you’ll get a basic idea of the accounts Principles. It will also increase your knowledge of accounting and help you perform well on any competitive exam.
For details you may read these articles:
- 6 Accounting Principles
- Accounting Concepts or assumptions
- Accounting Conventions
- Accounting Constraints
“35” Short Questions and Answers-Accounting Principles
Question-01: What’s the Principle?
Answer: The rules or regulations that are followed in order to carry out the work properly are called principles.
Question-02: What is the accounting Principle?
Answer: Accounting principle refers to a number of basic or self-evident truths that are universally accepted in accounting.
Question-03: What are the generally accepted accounting principles (GAAP)?
Answer: General principles that suggest how economic events should be reported.
Question-04: What is the International Financial Reporting Standards (IFRS)?
Answer: International standards for accounting set by the International Accounting Standards Board (IASB)
Question-05: What is the Economic Entity assumption?
Answer: The assumption which requires separation of the activities of the entity and all the other economic entities from the activities of its owner.
Question-06: What is the fair value principle?
Answer: The accounting principle that assets and liabilities (the price received to sell an asset or settle a liability) should be stated at fair value
Question-07: What’s the historical cost principle?
Answer: An accounting principle that states that assets should be reported at their cost by businesses.
Question-08: What is the Time period assumption?
Answer: The assumption that accountants are able to break a company’s economic life into artificial time periods.
Question-09: What is the revenue recognition principle?
Answer: The principle that companies recognize revenue during the accounting period in which the performance obligation is fulfilled.
Question-10: What is the Going Concern assumption?
Answer: The assumption that for the foreseeable future, the company will continue to operate.
Question-11: What’s the full disclosure principle?
Answer: The principle of accounting that requires a business to report to users of the circumstances and events of the financial statement that affect them.
Question-12: What’s the monetary unit assumption?
Answer: An assumption that businesses include only transaction data that can be expressed in terms of money in accounting records.
Question-13: What is the concept of accrual?
Answer: Under this concept, the outstanding expenses are added to the related expenses which have been paid and the outstanding revenues are added to the related revenues which have already been received during the accounting year concerned.
Question-14: What is the matching principle?
Answer: The matching principle is the connection between income and expenditure.
Question-15: What is the materiality Principle?
Answer: The principle of providing significant and important accounting information.
Question-16: What is the Conservatism Principle?
Answer: According to this principle, all possible losses have to be estimated and recorded in the books of accounts, but the potential gains cannot be recorded in the books of accounts.
Question-17: What is Industrial Practice?
Answer: A way of deviating from the accepted accounting policy due to the differences in the organization.
Question-18: What is the Consistency Principle?
Answer: The Consistency Principle is the principle that the same rules apply every year in the field of accounting.
Question-19: What is the objectivity Principle?
Answer: The principles followed in the measurement of data utility for maximum reliability of accounting information.
Question-20: What’s the Accounting convention?
Answer: Accounting convention is recognized or public conduct in the field of accounting.
Question-21: What is the Full form of AAA, AICPA, SFAC, ASB, FASB, IASC, and GAAP?
AAA = American Accounting Association.
AICPA= American Institute of Certified Public Accountants.
SFAC= Statements of Financial Accounting Concepts.
ASB= Accounting Standard Board.
FASB= Financial Accounting Standard Board.
IASC= International Accounting Standard Committee.
GAAP= Generally Accepted Accounting Principles.
Question-22: What is the concept?
Answer: The principle that is acceptable to all is called concept.
Question-23: What is the current name of IAS (International Accounting Standards)?
Answer: IFRS (International Financial Reporting Standards)
Question-24: What is the Financial Accounting Standards Board (FASB)?
Answer: Financial Accounting Standards Board (FASB) is a private organization that develops generally accepted accounting principles in the United States (GAAP).
Question-25: What is the International Accounting Standards Board (IASB)?
Answer: An accounting standard-setting body that issues standards followed outside the United States by several countries.
Question-26: What is the Securities and Exchange Commission (SEC)?
Answer: Securities and Exchange Commission (SEC) is a government agency that oversees U.S. financial markets and standard-setting bodies in accounting.
Question-27: Under what principle is depreciation charged on fixed assets?
Answer: The Going Concern Concept.
Question-28: On which basis is the profit-loss or income statement prepared?
Answer: According to the periodicity concept.
Question-29: According to which principle is the probable liability shown in the financial statements?
Answer: In accordance with the full disclosure principle.
Question-30: Advance income is shown as liability according to which principle?
Answer: According to the going concern concept.
Question-31: The asset is shown in the balance sheet at purchase price according to which principle of accounting?
Answer: According to the historical cost principle.
Question-32: Depreciation reserves are created according to which principle?
Answer: According to the full-disclosure principle.
Question-33: In accordance with which principle, in the determination of the price of the closing stock, is the lesser to be taken between the purchase price and the market price?
Answer: According to the conservatism principle.
Question-34: Which accounts are closed on the basis of the concept of the accounting period?
Answer: Nominal accounts or revenue and expenditure accounts.
Question-35: Expenditure is charged against income under which principle?
Answer: According to the matching principle.
I hope you have a basic idea about the accounting principles at the end of the article. Read these “35” Short Questions and Answers – Accounting Principles on a regular basis and enhance your accounting skills.
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